##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007.

or



| ̈ | Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
|- | -----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 000-26393



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Jupitermedia
Corporation

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 06-1542480                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                               |  |           
|---------------------------------------------- |  | ----------
|23 Old Kings Highway South Darien, Connecticut |  | 06820     
|(Address of principal executive offices)       |  | (Zip Code)

(203) 662-2800

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



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Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a
non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act: (Check one):

Large accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x

The number of outstanding shares the Registrants common stock, par value $.01 per share, as of November 6, 2007 was 35,939,416.



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##### Table of Contents

Jupitermedia Corporation

Index



|                              |  |                                                                                                                             |  |     
|----------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                                             |  | Page
|PART I. Financial Information |  |                                                                                                                            
|                              |  |                                                                                                                            
|Item 1.                       |  | Financial Statements                                                                                                        |  |     
|                              |  |                                                                                                                            
|                              |  | Unaudited Consolidated Condensed Balance Sheets  December 31, 2006 and September 30, 2007                                  |  | 3   
|                              |  |                                                                                                                            
|                              |  | Unaudited Consolidated Condensed Statements of Operations  For the Three and Nine Months Ended September 30, 2006 and 2007 |  | 4   
|                              |  |                                                                                                                            
|                              |  | Unaudited Consolidated Condensed Statements of Cash Flows  For the Nine Months Ended September 30, 2006 and 2007           |  | 5   
|                              |  |                                                                                                                            
|                              |  | Notes to Consolidated Condensed Financial Statements                                                                        |  | 6   
|                              |  |                                                                                                                            
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                       |  | 14  
|                              |  |                                                                                                                            
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                                                  |  | 20  
|                              |  |                                                                                                                            
|Item 4.                       |  | Controls and Procedures                                                                                                     |  | 21  
|                              | 
|PART II. Other Information    |  |                                                                                                                            
|                              |  |                                                                                                                            
|Item 1.                       |  | Legal Proceedings                                                                                                           |  | 21  
|                              |  |                                                                                                                            
|Item 1A.                      |  | Risk Factors                                                                                                                |  | 21  
|                              |  |                                                                                                                            
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                 |  | 21  
|                              |  |                                                                                                                            
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                             |  | 21  
|                              |  |                                                                                                                            
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                         |  | 21  
|                              |  |                                                                                                                            
|Item 5.                       |  | Other Information                                                                                                           |  | 21  
|                              |  |                                                                                                                            
|Item 6.                       |  | Exhibits                                                                                                                    |  | 21  
|                              | 
|Signatures                    |  | 23                                                                                                                         



2



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##### Table of Contents

Jupitermedia Corporation

Unaudited Consolidated Condensed Balance Sheets

December 31, 2006 and September 30, 2007

(in thousands, except share and per share amounts)



|                                                                                                                  |  |                   |         |   |                    |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ------------------ | - | ------- | -
|                                                                                                                  |  | December 31, 2006 |         |   | September 30, 2007 |  
|ASSETS                                                                                                            |  |                   |         |   |                    |   |         |  
|Current assets:                                                                                                   |  |                   |         |   |                    |   |         |  
|Cash and cash equivalents                                                                                         |  | $                 | 8,891   |   |                    | $ | 7,433   |  
|Accounts receivable, net of allowances of $2,114 and $2,211, respectively                                         |  |                   | 25,296  |   |                    |   | 27,176  |  
|Prepaid expenses and other                                                                                        |  |                   | 2,601   |   |                    |   | 7,096   |  
|Deferred income taxes                                                                                             |  |                   | 3,350   |   |                    |   | 3,304   |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|Total current assets                                                                                              |  |                   | 40,138  |   |                    |   | 45,009  |  
|                                                                                                                  |  |                  
|Property and equipment, net of accumulated depreciation of $13,996 and $17,051, respectively                      |  |                   | 11,691  |   |                    |   | 12,586  |  
|Intangible assets, net                                                                                            |  |                   | 77,923  |   |                    |   | 73,681  |  
|Goodwill                                                                                                          |  |                   | 199,010 |   |                    |   | 229,379 |  
|Deferred income taxes                                                                                             |  |                   | 2,147   |   |                    |   | 2,016   |  
|Investments and other assets                                                                                      |  |                   | 1,281   |   |                    |   | 2,440   |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|Total assets                                                                                                      |  | $                 | 332,190 |   |                    | $ | 365,111 |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                              |  |                   |         |   |                    |   |         |  
|Current liabilities:                                                                                              |  |                   |         |   |                    |   |         |  
|Accounts payable                                                                                                  |  | $                 | 5,269   |   |                    | $ | 7,563   |  
|Accrued payroll and related expenses                                                                              |  |                   | 3,188   |   |                    |   | 3,791   |  
|Accrued expenses and other                                                                                        |  |                   | 14,469  |   |                    |   | 11,591  |  
|Current portion of long-term debt                                                                                 |  |                   | 16,000  |   |                    |   | 750     |  
|Deferred revenues                                                                                                 |  |                   | 13,362  |   |                    |   | 15,657  |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|Total current liabilities                                                                                         |  |                   | 52,288  |   |                    |   | 39,352  |  
|                                                                                                                  |  |                  
|Long-term debt                                                                                                    |  |                   | 49,899  |   |                    |   | 87,063  |  
|Deferred revenues                                                                                                 |  |                   | 181     |   |                    |   | 456     |  
|Other long-term liabilities                                                                                       |  |                   |        |   |                    |   | 1,852   |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|Total liabilities                                                                                                 |  |                   | 102,368 |   |                    |   | 128,723 |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|Commitments and contingencies (see Note 12)                                                                       |  |                   |         |   |                    |   |         |  
|                                                                                                                  |  |                  
|Stockholders equity:                                                                                             |  |                   |         |   |                    |   |         |  
|Preferred stock, $.01 par value, 4,000,000 shares authorized, no shares issued                                    |  |                   |        |   |                    |   |        |  
|Common stock, $.01 par value, 75,000,000 shares authorized, 35,713,327 and 36,001,732 shares issued, respectively |  |                   | 357     |   |                    |   | 360     |  
|Additional paid-in capital                                                                                        |  |                   | 261,666 |   |                    |   | 265,873 |  
|Accumulated deficit                                                                                               |  |                   | (33,888 | ) |                    |   | (34,844 | )
|Treasury stock, 65,000 shares at cost                                                                             |  |                   | (106    | ) |                    |   | (106    | )
|Accumulated other comprehensive income                                                                            |  |                   | 1,793   |   |                    |   | 5,105   |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|Total stockholders equity                                                                                        |  |                   | 229,822 |   |                    |   | 236,388 |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  
|Total liabilities and stockholders equity                                                                        |  | $                 | 332,190 |   |                    | $ | 365,111 |  
|                                                                                                                  |  |                   |         |   |                    |   |         |  

See notes to consolidated condensed financial statements.



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##### Table of Contents

Jupitermedia Corporation

Unaudited Consolidated Condensed Statements of Operations

For the Three and Nine Months Ended September 30, 2006 and 2007

(in thousands, except per share amounts)



|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                              |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                                                                                              |  | 2006                             |        |   | 2007                            |   |        | 2006 |  |   | 2007    |  
|Revenues                                                                                      |  | $                                | 33,784 |   |                                 | $ | 34,766 |      |  | $ | 102,751 |   |  | $ | 104,206 |  
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Cost of revenues (exclusive of items shown separately below)                                  |  |                                  | 12,115 |   |                                 |   | 14,524 |      |  |   | 36,752  |   |  |   | 43,825  |  
|Advertising, promotion and selling                                                            |  |                                  | 7,120  |   |                                 |   | 7,168  |      |  |   | 22,161  |   |  |   | 21,534  |  
|General and administrative                                                                    |  |                                  | 7,259  |   |                                 |   | 6,511  |      |  |   | 20,626  |   |  |   | 21,221  |  
|Depreciation                                                                                  |  |                                  | 996    |   |                                 |   | 1,128  |      |  |   | 2,498   |   |  |   | 3,353   |  
|Amortization                                                                                  |  |                                  | 2,637  |   |                                 |   | 3,381  |      |  |   | 7,003   |   |  |   | 9,669   |  
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Total operating expenses                                                                      |  |                                  | 30,127 |   |                                 |   | 32,712 |      |  |   | 89,040  |   |  |   | 99,602  |  
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Operating income                                                                              |  |                                  | 3,657  |   |                                 |   | 2,054  |      |  |   | 13,711  |   |  |   | 4,604   |  
|Income (loss) on investments and other, net                                                   |  |                                  | (79    | ) |                                 |   | 15     |      |  |   | 58      |   |  |   | (34     | )
|Interest income                                                                               |  |                                  | 99     |   |                                 |   | 62     |      |  |   | 380     |   |  |   | 140     |  
|Interest expense                                                                              |  |                                  | (1,395 | ) |                                 |   | (2,328 | )    |  |   | (4,107  | ) |  |   | (5,232  | )
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Income (loss) before income taxes, minority interests and equity income from investments, net |  |                                  | 2,282  |   |                                 |   | (197   | )    |  |   | 10,042  |   |  |   | (522    | )
|Provision (benefit) for income taxes                                                          |  |                                  | 1,326  |   |                                 |   | 307    |      |  |   | 3,129   |   |  |   | 325     |  
|Minority interests                                                                            |  |                                  | (32    | ) |                                 |   | (30    | )    |  |   | (67     | ) |  |   | (109    | )
|Equity income from investments, net                                                           |  |                                  | 86     |   |                                 |   |       |      |  |   | 136     |   |  |   |        |  
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                                                      |  |                                  | 1,010  |   |                                 |   | (534   | )    |  |   | 6,982   |   |  |   | (956    | )
|Income from discontinued operations, net of taxes                                             |  |                                  |       |   |                                 |   |       |      |  |   | 67      |   |  |   |        |  
|Gain on sale of discontinued operations, net of taxes                                         |  |                                  |       |   |                                 |   |       |      |  |   | 5,573   |   |  |   |        |  
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Net income (loss)                                                                             |  | $                                | 1,010  |   |                                 | $ | (534   | )    |  | $ | 12,622  |   |  | $ | (956    | )
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Earnings (loss) per share:                                                                    |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Basic                                                                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                                                      |  | $                                | 0.03   |   |                                 | $ | (0.01  | )    |  | $ | 0.20    |   |  | $ | (0.03   | )
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Net income (loss)                                                                             |  | $                                | 0.03   |   |                                 | $ | (0.01  | )    |  | $ | 0.36    |   |  | $ | (0.03   | )
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Diluted                                                                                       |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                                                      |  | $                                | 0.03   |   |                                 | $ | (0.01  | )    |  | $ | 0.19    |   |  | $ | (0.03   | )
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Net income (loss)                                                                             |  | $                                | 0.03   |   |                                 | $ | (0.01  | )    |  | $ | 0.35    |   |  | $ | (0.03   | )
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Shares used in computing earnings (loss) per share:                                           |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Basic                                                                                         |  |                                  | 35,517 |   |                                 |   | 35,990 |      |  |   | 35,322  |   |  |   | 35,921  |  
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Diluted                                                                                       |  |                                  | 35,777 |   |                                 |   | 35,990 |      |  |   | 36,109  |   |  |   | 35,921  |  
|                                                                                              |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  

See notes to consolidated condensed financial statements.



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##### Table of Contents

Jupitermedia Corporation

Unaudited Consolidated Condensed Statements of Cash Flows

For the Nine Months Ended September 30, 2006 and 2007

(in thousands)



|                                                                                                                |  |                                 |         |   |      |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                |  | Nine Months Ended September 30, |        
|                                                                                                                |  | 2006                            |         |   | 2007 |  
|Cash flows from operating activities:                                                                           |  |                                 |         |   |      |   |         |  
|Income (loss) from continuing operations                                                                        |  | $                               | 6,982   |   |      | $ | (956    | )
|Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities: |  |                                 |         |   |      |   |         |  
|Depreciation and amortization                                                                                   |  |                                 | 9,501   |   |      |   | 13,022  |  
|Stock-based compensation                                                                                        |  |                                 | 2,894   |   |      |   | 2,363   |  
|Provision for losses on accounts receivable                                                                     |  |                                 | 361     |   |      |   | 62      |  
|Minority interests                                                                                              |  |                                 | 67      |   |      |   | 109     |  
|Equity income from investments, net                                                                             |  |                                 | (136    | ) |      |   |        |  
|(Income) loss on investments and other, net                                                                     |  |                                 | (58     | ) |      |   | 34      |  
|Deferred income taxes                                                                                           |  |                                 | 1,885   |   |      |   | 288     |  
|Excess tax benefit from stock-based compensation                                                                |  |                                 | (3,014  | ) |      |   | (731    | )
|Changes in operating assets and liabilities (net of businesses acquired):                                       |  |                                 |         |   |      |   |         |  
|Accounts receivable                                                                                             |  |                                 | (4,300  | ) |      |   | (1,587  | )
|Prepaid expenses and other                                                                                      |  |                                 | (2,189  | ) |      |   | (260    | )
|Accounts payable and accrued expenses and other                                                                 |  |                                 | (9,078  | ) |      |   | (3,753  | )
|Deferred revenues                                                                                               |  |                                 | 1,423   |   |      |   | 1,563   |  
|Discontinued operations                                                                                         |  |                                 | 1,110   |   |      |   |        |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Net cash provided by operating activities                                                                       |  |                                 | 5,448   |   |      |   | 10,154  |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Cash flows from investing activities:                                                                           |  |                                 |         |   |      |   |         |  
|Purchases of property and equipment                                                                             |  |                                 | (2,302  | ) |      |   | (4,003  | )
|Acquisitions of businesses, images and other                                                                    |  |                                 | (29,162 | ) |      |   | (30,246 | )
|Proceeds from sales of assets and other                                                                         |  |                                 | 368     |   |      |   | 142     |  
|Proceeds from sale of discontinued operations                                                                   |  |                                 | 9,600   |   |      |   |        |  
|Discontinued operations                                                                                         |  |                                 |        |   |      |   |        |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Net cash used in investing activities                                                                           |  |                                 | (21,496 | ) |      |   | (34,107 | )
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Cash flows from financing activities:                                                                           |  |                                 |         |   |      |   |         |  
|Borrowings under credit facilities                                                                              |  |                                 | 19,000  |   |      |   | 94,900  |  
|Debt issuance costs                                                                                             |  |                                 | (38     | ) |      |   | (1,537  | )
|Repayment of borrowings under credit facilities                                                                 |  |                                 | (16,965 | ) |      |   | (72,986 | )
|Proceeds from exercise of stock options                                                                         |  |                                 | 2,647   |   |      |   | 1,115   |  
|Excess tax benefit from stock-based compensation                                                                |  |                                 | 3,014   |   |      |   | 731     |  
|Discontinued operations                                                                                         |  |                                 |        |   |      |   |        |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Net cash provided by financing activities                                                                       |  |                                 | 7,658   |   |      |   | 22,223  |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Effects of exchange rates on cash and cash equivalents                                                          |  |                                 | 108     |   |      |   | 272     |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                                                       |  |                                 | (8,282  | ) |      |   | (1,458  | )
|Cash and cash equivalents, beginning of period                                                                  |  |                                 | 18,546  |   |      |   | 8,891   |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                                                        |  | $                               | 10,264  |   |      | $ | 7,433   |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Supplemental disclosures of cash flow:                                                                          |  |                                 |         |   |      |   |         |  
|Cash paid for income taxes                                                                                      |  | $                               | 7,818   |   |      | $ | 2,375   |  
|                                                                                                                |  |                                 |         |   |      |   |         |  
|Cash paid for interest                                                                                          |  | $                               | 2,854   |   |      | $ | 4,800   |  
|                                                                                                                |  |                                 |         |   |      |   |         |  

See notes to consolidated condensed financial statements.



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##### Table of Contents

Jupitermedia Corporation

Notes to Consolidated Condensed Financial Statements

September 30, 2007

(unaudited)

1. THE COMPANY

Jupitermedia Corporation (Jupitermedia) is a global provider of images, original information and events for information technology (IT), business and creative professionals. Jupitermedia includes Jupiterimages, one
of the leading images companies in the world with over 7.0 million images online serving creative professionals with brands like BananaStock, Workbook Stock, Brand X Pictures, FoodPix, Botanica, Nonstock, The Beauty Archive, IFA
Bilderteam, Comstock Images, Creatas Images, PictureQuest, Liquid Library, Thinkstock Images, Thinkstock Footage, Bigshot Media, Goodshoot, Polka Dot Images, Stock Image, Pixland, Photos.com, Ablestock.com, PhotoObjects.net, Clipart.com,
AnimationFactory.com, JupiterGreetings.com, RoyaltyFreeMusic.com, StudioCutz.com and Stockxpert.com. The JupiterOnlineMedia division of Jupitermedia includes five distinct online networks: internet.com and EarthWeb.com for IT and business
professionals; DevX.com for developers; and Mediabistro.com and Graphics.com for media and creative professionals. JupiterOnlineMedia also includes specialized career Web sites for select professional communities which can be found on
Mediabistro.com and JustTechJobs.com. In addition, JupterOnlineMedia includes JupiterEvents and Mediabistros media-related events, which produce offline conferences and trade shows focused on IT and business-specific topics including ISPCON
and Web Video Summit.

2. BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been prepared from the books and records of Jupitermedia in accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete
financial statements. The consolidated condensed statements of operations for the three and nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for the full year. These unaudited consolidated
condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Jupitermedias Annual Report on Form 10-K for the year ended December 31, 2006. In the opinion of
management, all adjustments considered necessary for a fair presentation of the results for the interim periods presented have been reflected in such consolidated condensed financial statements.

The consolidated condensed financial statements include the accounts of Jupitermedia and its majority-owned and wholly-owned subsidiaries. All
intercompany transactions have been eliminated.

3. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America, and expands
disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Jupitermedia is currently evaluating
whether the adoption of SFAS No. 157 will have an impact on its consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to choose to measure many financial assets and financial liabilities at fair
value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Jupitermedia is currently evaluating
whether the adoption of SFAS No. 159 will have an impact on its consolidated financial position, results of operations or cash flows.

4. ACCOUNTING FOR STOCK-BASED COMPENSATION

Pursuant to SFAS No. 123 (Revised) Share-Based Payment
(SFAS No. 123R), Jupitermedia must recognize the compensation expense for equity awards over the vesting period based on their grant-date fair value.

Total stock-based compensation recognized in continuing operations for the three and nine months ended September 30, 2006 and 2007 are summarized in the following table (in thousands):



|                         |  |                                 |       |                                |   |      |  |      |       |  |   |      
|------------------------ |  | ------------------------------- | ----- | ------------------------------ | - | ---- |  | ---- | ----- |  | - | -----
|                         |  | Three Months EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                         |  | 2006                            |       | 2007                           |   | 2006 |  | 2007
|Stock-based compensation |  | $                               | 1,226 |                                | $ | 652  |  | $    | 2,894 |  | $ | 2,363
|                         |  |                                 |       |                                |   |      |  |      |       |  |   |      

Jupitermedia uses the Black-Scholes pricing model to estimate the fair value of stock-based awards
with the following assumptions for the indicated periods:



|                         |  |                                |   |  |      |  
|------------------------ |  | ------------------------------ | - |  | ---- | -
|                         |  | Nine Months EndedSeptember 30, |  
|                         |  | 2006                           |   |  | 2007 |  
|Risk-free interest rate  |  | 4.98                           | % |  | 4.88 | %
|Expected life (in years) |  | 4.5                            |   |  | 4.2  |  
|Dividend yield           |  | 0                              | % |  | 0    | %
|Expected volatility      |  | 56                             | % |  | 65   | %

The expected stock price volatility is based on the historical volatility of Jupitermedias
common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is
based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior.

The following table summarizes option activity during the nine months ended September 30, 2007:



|                                                  |  |           |   |  |                              |       |                                                 |      |                                        |   |      
|------------------------------------------------- |  | --------- | - |  | ---------------------------- | ----- | ----------------------------------------------- | ---- | -------------------------------------- | - | -----
|                                                  |  | Shares    |   |  | WeightedAverageExercisePrice |       | WeightedAverageRemainingContractualTerm (years) |      | AggregateIntrinsicValue (in thousands)
|Outstanding at December 31, 2006                  |  | 4,751,974 |   |  | $                            | 10.96 |                                                 |      |                                        |   |      
|Granted                                           |  | 767,800   |   |  | $                            | 7.40  |                                                 |      |                                        |   |      
|Exercised                                         |  | (288,405  | ) |  | $                            | 3.86  |                                                 |      |                                        |   |      
|Forfeited or expired                              |  | (364,433  | ) |  | $                            | 13.79 |                                                 |      |                                        |   |      
|                                                  |  |           |   |  |                              |       |                                                 |      |                                        |   |      
|Outstanding at September 30, 2007                 |  | 4,866,936 |   |  | $                            | 10.61 |                                                 | 4.79 |                                        | $ | 3,927
|                                                  |  |           |   |  |                              |       |                                                 |      |                                        |   |      
|Vested and expected to vest at September 30, 2007 |  | 4,623,823 |   |  | $                            | 10.60 |                                                 | 4.75 |                                        | $ | 3,927
|                                                  |  |           |   |  |                              |       |                                                 |      |                                        |   |      
|Exercisable at September 30, 2007                 |  | 3,651,373 |   |  | $                            | 10.59 |                                                 | 4.57 |                                        | $ | 3,927
|                                                  |  |           |   |  |                              |       |                                                 |      |                                        |   |      

The aggregate intrinsic value in the table above is before income taxes, based on
Jupitermedias closing stock price of $6.33 as of September 30, 2007.

During the nine months ended September 30, 2007, the total
intrinsic value of stock options exercised was $1.0 million.

As of September 30, 2007, there was $4.8 million of total unrecognized
compensation cost related to nonvested stock-based compensation arrangements granted under the stock incentive plan. That cost is expected to be amortized over a weighted-average period of thirteen months.

Cash provided by operating activities decreased and cash provided by financing activities increased by $3.0 million and $731,000, related to excess tax
benefits from stock-based payment arrangements for the nine months ended September 30, 2006 and 2007, respectively.



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##### Table of Contents

5. COMPUTATION OF EARNINGS PER SHARE

Basic earnings or loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings or loss
per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental common shares issuable upon the exercise of stock options.
Common equivalent shares are excluded from the calculation if their effect is anti-dilutive.

Computations of basic and diluted earnings
(loss) per share for the three and nine months ended September 30, 2006 and 2007 are as follows (in thousands, except per share amounts):



|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|--------------------------------------------------------------------- |  | -------------------------------- | ------ | ---- | ------------------------------- | ------ | ---- |  | ---- | ------ |  | - | ------ | -
|                                                                      |  | Three Months Ended September 30, |        |      | Nine Months Ended September 30, |       
|                                                                      |  | 2006                             |        | 2007 |                                 |        | 2006 |  | 2007 |       
|Income (loss) from continuing operations                              |  | $                                | 1,010  |      | $                               | (534   | )    |  | $    | 6,982  |  | $ | (956   | )
|Income from discontinued operations, net of taxes                     |  |                                  |       |      |                                 |       |      |  |      | 67     |  |   |       |  
|Gain on sale of discontinued operations, net of taxes                 |  |                                  |       |      |                                 |       |      |  |      | 5,573  |  |   |       |  
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Net income (loss)                                                     |  | $                                | 1,010  |      | $                               | (534   | )    |  | $    | 12,622 |  | $ | (956   | )
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Basic weighted average common shares outstanding                      |  |                                  | 35,517 |      |                                 | 35,990 |      |  |      | 35,322 |  |   | 35,921 |  
|Effect of dilutive stock options                                      |  |                                  | 260    |      |                                 |       |      |  |      | 787    |  |   |       |  
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Total basic weighted average common shares and dilutive stock options |  |                                  | 35,777 |      |                                 | 35,990 |      |  |      | 36,109 |  |   | 35,921 |  
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Earnings (Loss) Per Share:                                            |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Basic                                                                 |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Income (loss) from continuing operations                              |  | $                                | 0.03   |      | $                               | (0.01  | )    |  | $    | 0.20   |  | $ | (0.03  | )
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Income from discontinued operations                                   |  | $                                |       |      | $                               |       |      |  | $    | 0.16   |  | $ |       |  
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Net income (loss)                                                     |  | $                                | 0.03   |      | $                               | (0.01  | )    |  | $    | 0.36   |  | $ | (0.03  | )
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Diluted                                                               |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Income (loss) from continuing operations                              |  | $                                | 0.03   |      | $                               | (0.01  | )    |  | $    | 0.19   |  | $ | (0.03  | )
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Income from discontinued operations                                   |  | $                                |       |      | $                               |       |      |  | $    | 0.16   |  | $ |       |  
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  
|Net income (loss)                                                     |  | $                                | 0.03   |      | $                               | (0.01  | )    |  | $    | 0.35   |  | $ | (0.03  | )
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |        |  |   |        |  



7



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##### Table of Contents

The following table summarizes the number of outstanding stock options excluded from the calculation of
diluted earnings per share for the periods presented because the result would have been anti-dilutive (in thousands, except weighted average exercise price):



|                                      |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|------------------------------------- |  | -------------------------------- | ----- | ------------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                      |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|                                      |  | 2006                             |       | 2007                            |   | 2006  |  | 2007
|Number of anti-dilutive stock options |  |                                  | 3,323 |                                 |   | 4,867 |  |      | 869   |  |   | 4,867
|Weighted average exercise price       |  | $                                | 14.94 |                                 | $ | 10.61 |  | $    | 18.78 |  | $ | 10.61

6. INTANGIBLE ASSETS AND GOODWILL

Intangible assets and goodwill include the preliminary allocation of the purchase price relating to the acquisition of Mediabistro.com Inc. (see Note 8).
Jupitermedia is in the process of obtaining a third party valuation of certain intangible assets, thus the allocation of the purchase price relating to the acquisition is subject to refinement.

Amortized Intangible Assets

The following table sets forth the intangible assets that are subject to amortization, including the related accumulated amortization (in thousands):



|                                       |  |                    |        |                          |   |         |                    |  |   |       
|-------------------------------------- |  | ------------------ | ------ | ------------------------ | - | ------- | ------------------ |  | - | ------
|                                       |  | December 31, 2006 
|                                       |  | Cost               |        | Accumulated Amortization |   |         | Net Carrying Value
|Image library                          |  | $                  | 49,526 |                          | $ | (8,486  | )                  |  | $ | 41,040
|Supplier and contributor contracts     |  |                    | 15,528 |                          |   | (2,479  | )                  |  |   | 13,049
|Customer and distributor relationships |  |                    | 7,126  |                          |   | (2,075  | )                  |  |   | 5,051 
|Web site development costs             |  |                    | 5,895  |                          |   | (2,986  | )                  |  |   | 2,909 
|Trademarks                             |  |                    | 3,916  |                          |   | (2,873  | )                  |  |   | 1,043 
|Non-compete agreements                 |  |                    | 1,550  |                          |   | (699    | )                  |  |   | 851   
|                                       |  |                    |        |                          |   |         |                    |  |   |       
|Total                                  |  | $                  | 83,541 |                          | $ | (19,598 | )                  |  | $ | 63,943
|                                       |  |                    |        |                          |   |         |                    |  |   |       
|                                       | 
|                                       |  | September 30, 2007
|                                       |  | Cost               |        | Accumulated Amortization |   |         | Net Carrying Value
|Image library                          |  | $                  | 52,966 |                          | $ | (12,500 | )                  |  | $ | 40,466
|Supplier and contributor contracts     |  |                    | 15,492 |                          |   | (5,222  | )                  |  |   | 10,270
|Customer and distributor relationships |  |                    | 6,423  |                          |   | (3,033  | )                  |  |   | 3,390 
|Web site development costs             |  |                    | 7,694  |                          |   | (4,197  | )                  |  |   | 3,497 
|Trademarks                             |  |                    | 4,337  |                          |   | (3,296  | )                  |  |   | 1,041 
|Non-compete agreements                 |  |                    | 1,860  |                          |   | (1,018  | )                  |  |   | 842   
|                                       |  |                    |        |                          |   |         |                    |  |   |       
|Total                                  |  | $                  | 88,772 |                          | $ | (29,266 | )                  |  | $ | 59,506
|                                       |  |                    |        |                          |   |         |                    |  |   |       

Intangibles that are subject to amortization are amortized on a straight-line basis over their
expected useful lives. The image library is amortized over seven and fifteen years, customer and distributor relationships are amortized over periods ranging from three to eight years, Web site development costs are amortized over three or five
years and trademarks are amortized over three years. Supplier and contributor contracts are amortized over seven years. Non-compete agreements are amortized over the period of the agreements ranging from one to three years.



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##### Table of Contents

Amortization expense related to intangible assets subject to amortization was $2.6 million and $7 million
for the three and nine months ended September 30, 2006, respectively, and was $3.5 million and $9.8 million, for the three and nine months ended September 30, 2007, respectively. Estimated annual amortization expense for the next five
years, including the remainder of 2007, is expected to be as follows (in thousands):



|                         |  |   |       
|------------------------ |  | - | ------
|Year Ending December 31,
|2007                     |  | $ | 3,193 
|2008                     |  |   | 12,289
|2009                     |  |   | 11,079
|2010                     |  |   | 8,748 
|2011                     |  |   | 4,906 
|Thereafter               |  |   | 19,291
|                         |  |   |       
|                         |  | $ | 59,506
|                         |  |   |       

Unamortized Intangible Assets



|             |  |                   |        |                    |   |       
|------------ |  | ----------------- | ------ | ------------------ | - | ------
|             |  | December 31, 2006 |        | September 30, 2007
|Domain names |  | $                 | 13,980 |                    | $ | 14,175
|             |  |                   |        |                    |   |       

Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2007, are as follows (in thousands):



|                                 |  |               |         |              |   |        |       |  |   |        
|-------------------------------- |  | ------------- | ------- | ------------ | - | ------ | ----- |  | - | -------
|                                 |  | Online Images |         | Online Media |   |        | Total
|Balance as of December 31, 2006  |  | $             | 190,092 |              | $ | 8,918  |       |  | $ | 199,010
|Goodwill acquired during period  |  |               | 2,252   |              |   | 18,714 |       |  |   | 20,966 
|Purchase accounting adjustments  |  |               | 7,945   |              |   | (1,170 | )     |  |   | 6,775  
|Effect of foreign currency       |  |               | 2,628   |              |   |       |       |  |   | 2,628  
|                                 |  |               |         |              |   |        |       |  |   |        
|Balance as of September 30, 2007 |  | $             | 202,917 |              | $ | 26,462 |       |  | $ | 229,379
|                                 |  |               |         |              |   |        |       |  |   |        

Purchase accounting adjustments pertain primarily to adjustments made to the fair value of certain
intangible assets purchased in conjunction with acquisitions.

7. DEBT AND DERIVATIVE INSTRUMENT

Jupitermedia is party to a Credit and Security Agreement, dated as of July 12, 2007 (the Credit Agreement), among Jupitermedia, as
borrower, the lenders party thereto (the Lenders), KeyBank National Association, as the lead arranger, sole book runner and administrative agent (the Administrative Agent), and Citizens Bank, N.A., as Syndication Agent. The
Credit Agreement provides for a $115 million senior credit facility. The senior credit facility is comprised of (i) a $75 million term loan facility, that was drawn in full on July 12, 2007, and (ii) a $40 million revolving credit
facility, including a $2 million sublimit for letters of credit and a $5 million swingline facility. The future minimum payments under the Credit Agreement are $187,500 for the year ended December 31, 2007, $750,000 for the years ended
December 31, 2008 through 2011, and $84.6 million thereafter. Jupitermedias outstanding debt, relating to the Credit Agreement, as of September 30, 2007 is reflected in the unaudited consolidated condensed balance sheets.
Jupitermedia made one quarterly debt payment on its term loan totaling $187,500 during the three months ended September 30, 2007.



9



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##### Table of Contents

Jupitermedia is in compliance with its debt covenants relating to the Credit Agreement as of September
30, 2007.

Pursuant to the Credit Agreement, Jupitermedia also entered into a derivative interest rate swap that is to mature in July 2013,
which has been designated as a cash flow hedge. The objective of the hedge is to eliminate the variability of cash flows in the interest payments of $50 million of variable rate debt. Under this agreement, we receive a floating rate based on the
LIBOR interest rate, and pay a fixed rate of 5.58% on the notional amount of $50 million.

As required by SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended, all derivative instruments are recorded on the balance sheet at fair value as derivative assets or derivative liabilities. Subject to certain specific qualifying
conditions in SFAS No. 133, a derivative instrument may be designated either as a hedge of the fair value of an asset or liability (fair value hedge), or as a hedge of the variability of cash flows of an asset or liability or forecasted transaction
(cash flow hedge). Gains and losses on derivative instruments designated as cash flow hedges, to the extent they are effective, are recorded in other comprehensive income, a component of stockholders equity, and subsequently reclassified to
earnings to offset the impact of the hedged items when they occur. In the event the forecasted transaction to which a cash flow hedge relates is no longer likely, the amount in other comprehensive income is recognized in earnings and generally the
derivative is terminated. Changes in the fair value of derivatives not qualifying as hedges, and for any portion of a hedge that is ineffective, are reported in earnings. The net interest paid or received on interest rate swaps is recognized as
interest expense. Gains resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments to interest expense over the remaining period of the debt originally covered by the terminated swap.

At September 30, 2007, the fair value of the interest rate swap was a net loss of $1.9 million and is recorded as other long-term liabilities in
Jupitermedias unaudited consolidated condensed balance sheet. During the three months ended September 30, 2007, the effective portion of the change in fair value of the interest rate swap of $1.1 million, net of tax, was recorded as an
unrecognized loss in accumulated other comprehensive income in stockholders equity and there was no ineffective portion.

8.
ACQUISITION

On July 17, 2007, Jupitermedia agreed to acquire all of the shares of capital stock (the Acquisition) of
Mediabistro.com Inc., a private company incorporated in Delaware (Mediabistro), pursuant to an Agreement and Plan of Merger (the Merger Agreement), dated as of July 17, 2007, by and among Jupitermedia, Mediabistro
Acquisition Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of Jupitermedia (Merger Sub), Mediabistro and Laurel Touby, as agent for the security holders of Mediabistro, in which, among other things, (x) the
Merger Sub would merge with and into Mediabistro, (y) the separate existence of Merger Sub would cease, and (z) Mediabistro would continue its existence as both the surviving corporation and a wholly-owned subsidiary of Jupitermedia.
Mediabistro, based in New York City, is a career and community site for media and creative professionals, and includes job postings, educational courses, events, forums, original content and a premium subscription service. The Acquisition closed the
following day on July 18, 2007 concurrently with the filing of the Certificate of Merger with the Secretary of State of the State of Delaware.

The consideration paid in the Acquisition consisted of $20 million in cash and a two year earn-out that could result in an additional $3 million in cash consideration. Funding for the acquisition was secured through the Credit Agreement
arranged by KeyBank National Association (See Note 7).

The total purchase price has been allocated to the assets and liabilities based on
estimates of their respective fair values.



The following table
summarizes the preliminary purchase price allocation of the acquisition of Mediabistro.com (in thousands):



|                                     |  |   |       
|------------------------------------ |  | - | ------
|Cash and cash equivalents            |  | $ | 1,133 
|Accounts receivable, net             |  |   | 512   
|Prepaid expenses and other           |  |   | 514   
|Property, plant and equipment        |  |   | 87    
|Domain names                         |  |   | 900   
|Customer relationships               |  |   | 160   
|Web site development costs           |  |   | 540   
|Covenant not to compete              |  |   | 115   
|Goodwill                             |  |   | 17,854
|Deferred income taxes                |  |   | 48    
|                                     |  |   |       
|Total assets acquired                |  |   | 21,863
|                                     |  |   |       
|Accounts payable                     |  |   | 630   
|Accrued payroll and related expenses |  |   | 99    
|Accrued expenses                     |  |   | 146   
|Deferred revenue                     |  |   | 988   
|                                     |  |   |       
|Total liabilities assumed            |  |   | 1,863 
|                                     |  |   |       
|Net assets acquired                  |  | $ | 20,000
|                                     |  |   |       

The intangible assets subject to amortization are being amortized on a straight-line basis over
periods ranging from three to fifteen years. Jupitermedia is in the process of obtaining a third party valuation of certain intangible assets, thus the allocation of the purchase price relating to acquisition of Mediabistro is subject to refinement.
The goodwill associated with the acquisition of Mediabistro is not deductible for tax purposes.

The acquisition of Mediabistro strengthens
Jupitermedias position in the important media professionals market. The acquisition of Mediabistro further diversifies Jupitermedias revenue sources since a significant percentage of Mediabistros revenue is generated from online
job postings and online and in-person training courses. Jupitermedia believes that online job postings and online and in-person training courses are natural e-commerce offerings for the 20 million unique users that it has on its Online media
and Online images Web sites. Jupitermedia also believes that many of the 1.0 million unique users on Mediabistro will be buyers of its Online images product offerings. These factors lead to a significant portion of the purchase price of
Mediabistro being allocated to goodwill.



10



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##### Table of Contents

Unaudited pro forma information below presents results of operations as if the acquisition of Mediabistro
had occurred on the first day of the periods presented. The unaudited pro forma information is not necessarily indicative of the results of operations for the combined companies had these events occurred at the beginning of the periods presented,
nor is it indicative of future results (in thousands, except per share amounts):



|                           |  |                                  |        |      |                                 |        |      |  |      |         |  |   |        
|-------------------------- |  | -------------------------------- | ------ | ---- | ------------------------------- | ------ | ---- |  | ---- | ------- |  | - | -------
|                           |  | Three Months Ended September 30, |        |      | Nine Months Ended September 30,
|                           |  | 2006                             |        | 2007 |                                 |        | 2006 |  | 2007
|Revenues                   |  | $                                | 35,248 |      | $                               | 35,087 |      |  | $    | 106,989 |  | $ | 108,381
|Net income (loss)          |  | $                                | 1,353  |      | $                               | (493   | )    |  | $    | 13,648  |  | $ | 251    
|Basic earnings per share   |  | $                                | 0.04   |      | $                               | (0.01  | )    |  | $    | 0.41    |  | $ | 0.01   
|Diluted earnings per share |  | $                                | 0.04   |      | $                               | (0.01  | )    |  | $    | 0.38    |  | $ | 0.01   

9. DISPOSITIONS AND DISCONTINUED OPERATIONS

On March 28, 2006, Jupitermedia sold its JupiterResearch division. As a result of the sale of the JupiterResearch division, the Research segment is
now reflected as a discontinued operation in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Income from discontinued operations for the three and nine months ended September 30,
2006 was $0 and $67,000, respectively, net of income taxes of $0 and $52,000, respectively.

The following table summarizes the revenue and
income before income taxes of the discontinued Research operation (in thousands):



|                           |  |                                  |   |                                 |   |      |  |      |       |  |   |  
|-------------------------- |  | -------------------------------- | - | ------------------------------- | - | ---- |  | ---- | ----- |  | - | -
|                           |  | Three Months Ended September 30, |   | Nine Months Ended September 30,
|                           |  | 2006                             |   | 2007                            |   | 2006 |  | 2007
|Revenues                   |  | $                                |  |                                 | $ |     |  | $    | 2,388 |  | $ | 
|Income before income taxes |  | $                                |  |                                 | $ |     |  | $    | 119   |  | $ | 

10. SEGMENT INFORMATION

Jupitermedia has two reportable segments: Online images and Online media. The following tables summarize the results of the segments of Jupitermedia for
the three and nine months ended September 30, 2006 and 2007. Online images consists of the Jupiterimages business that includes BananaStock, Workbook Stock, Brand X Pictures, FoodPix, Botanica, Nonstock, The Beauty Archive, IFA Bilderteam,
Comstock Images, Creatas Images, PictureQuest, Liquid Library, Thinkstock Images, Thinkstock Footage, Goodshoot, Polka Dot Images, Stock Image, Pixland, Photos.com, Ablestock.com, PhotoObjects.net, Clipart.com, AnimationFactory.com,
JupiterGreetings.com, RoyaltyFreeMusic.com, StudioCutz.com and Stockxpert.com. Online media includes the internet.com, EarthWeb.com, DevX.com, Mediabistro.com and Graphics.com Networks. Jupitermedia evaluates segment performance based on income or
loss from operations. Other includes corporate overhead, depreciation, amortization and venture fund related activities. With the exception of goodwill, Jupitermedia does not identify or allocate assets by operating segment. See Note 6 for the
allocation of goodwill to Jupitermedias reportable segments.



11



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##### Table of Contents

Summary information by segment for the three and nine months ended September 30, 2006 and 2007 is as
follows (in thousands):



|                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|---------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                         |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                                         |  | 2006                             |        |   | 2007                            |   |        | 2006 |  |   | 2007    |  
|Revenues:                                |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Online images                            |  | $                                | 26,177 |   |                                 | $ | 26,824 |      |  | $ | 79,549  |   |  | $ | 82,121  |  
|Online media                             |  |                                  | 7,607  |   |                                 |   | 7,942  |      |  |   | 23,196  |   |  |   | 22,085  |  
|Other                                    |  |                                  |       |   |                                 |   |       |      |  |   | 6       |   |  |   |        |  
|                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|                                         |  |                                  | 33,784 |   |                                 |   | 34,766 |      |  |   | 102,751 |   |  |   | 104,206 |  
|                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Cost of revenues and operating expenses: |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Online images                            |  |                                  | 16,975 |   |                                 |   | 17,992 |      |  |   | 50,944  |   |  |   | 55,445  |  
|Online media                             |  |                                  | 4,616  |   |                                 |   | 6,390  |      |  |   | 15,254  |   |  |   | 16,795  |  
|Depreciation and amortization            |  |                                  | 3,633  |   |                                 |   | 4,509  |      |  |   | 9,501   |   |  |   | 13,022  |  
|Other                                    |  |                                  | 4,903  |   |                                 |   | 3,821  |      |  |   | 13,341  |   |  |   | 14,340  |  
|                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|                                         |  |                                  | 30,127 |   |                                 |   | 32,712 |      |  |   | 89,040  |   |  |   | 99,602  |  
|                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Operating income (loss):                 |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Online images                            |  |                                  | 9,202  |   |                                 |   | 8,832  |      |  |   | 28,605  |   |  |   | 26,676  |  
|Online media                             |  |                                  | 2,991  |   |                                 |   | 1,552  |      |  |   | 7,942   |   |  |   | 5,290   |  
|Other                                    |  |                                  | (8,536 | ) |                                 |   | (8,330 | )    |  |   | (22,836 | ) |  |   | (27,362 | )
|                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|                                         |  | $                                | 3,657  |   |                                 | $ | 2,054  |      |  | $ | 13,711  |   |  | $ | 4,604   |  
|                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  

11. INCOME TAXES

On January 1, 2007, Jupitermedia adopted the provisions of FASB Interpretation 48, Accounting for Uncertainty in Income Taxes (FIN 48).
FIN 48 creates a two-step approach for evaluating uncertain tax positions. Recognition, the first step, occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon
examination. Measurement, the second step, determines the amount of benefit that more-likely-than-not will be realized upon settlement. Reversal of a tax position that was previously recognized would occur when an enterprise subsequently determines
that a tax position no longer meets the more-likely-than-not threshold of being sustained. FIN 48 specifically prohibits the use of a valuation allowance as a substitute for the reversal of tax positions, and it has expanded disclosure requirements.
The adoption of FIN 48 did not result in a change to Jupitermedias January 1, 2007 balance of accumulated deficit. Jupitermedia remains open for examination by the Internal Revenue Service for 2004 through 2006 and is currently under
examination for 2005. For most of its other significant tax jurisdictions, Jupitermedias income tax returns are also open for examination for 2004 through 2006. The amount of unrecognized tax benefit as of September 30, 2007 was $109,000
and is included in accrued expenses and other in the unaudited consolidated condensed balance sheets. There was not a significant change in Jupitermedias liabilities for unrecognized tax benefits during the three and nine months ended
September 30, 2007. Jupitermedia does not believe it is reasonably possible that the total amount of unrealized tax benefits will change significantly in the next twelve months. Jupitermedia includes interest expense or income as well as
potential penalties on uncertain tax positions as a component of income tax expense in the unaudited consolidated condensed statement of operations. The total amount of accrued interest and penalties related to uncertain tax positions at
September 30, 2007 was $17,000 and is included in accrued expenses and other.

12. COMMITMENTS AND CONTINGENCIES

On or about November 13, 2006, Robert Lange, who identifies himself as a stockholder of Jupitermedia, commenced a purported stockholders
derivative action in the United States District Court for the District of Connecticut, purportedly on behalf of Jupitermedia, against all of Jupitermedias current directors and against Jupitermedias former Chief Financial Officer.
Jupitermedia is named in the suit as a nominal defendant on whose behalf recovery is purportedly sought. Mr. Lange did not make a litigation demand on Jupitermedias board of directors prior to commencing the action, and
alleges that such demand should be excused as a matter of law. The complaint alleges, based primarily on a statistical analysis, that certain stock options granted to certain of the defendants in 1999, 2000 and 2001 were backdated, and asserts on
behalf of Jupitermedia various causes of action against the defendants arising out of such alleged backdating, including securities fraud, breach of fiduciary duty and unjust enrichment. On April 24, 2007, Jupitermedia and the individual
defendants filed a motion to dismiss the case in its entirety. Rather than respond to the motion to dismiss, the Plaintiff filed an amended complaint on July 16, 2007. The amended complaint removes one of the individual defendants, but is
substantially similar to the original complaint. On or around September 11, 2007, Defendants filed a motion to dismiss the Amended Complaint. Briefing on that motion is completed, and oral argument is scheduled to be held on the motion in
December 2007.



12



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##### Table of Contents

Jupitermedia is subject to legal proceedings and claims that arise in the ordinary course of its
business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial statements of Jupitermedia.

13. COMPREHENSIVE INCOME

Comprehensive income is as follows (in thousands):



|                                                                |  |                                  |       |      |                                 |        |      |  |      |        |  |   |        |  
|--------------------------------------------------------------- |  | -------------------------------- | ----- | ---- | ------------------------------- | ------ | ---- |  | ---- | ------ |  | - | ------ | -
|                                                                |  | Three Months Ended September 30, |       |      | Nine Months Ended September 30, |       
|                                                                |  | 2006                             |       | 2007 |                                 |        | 2006 |  | 2007 |       
|Net income (loss)                                               |  | $                                | 1,010 |      | $                               | (534   | )    |  | $    | 12,622 |  | $ | (956   | )
|                                                                |  |                                  |       |     
|Foreign currency translation adjustment                         |  |                                  | 970   |      |                                 | 2,786  |      |  |      | 2,551  |  |   | 4,429  |  
|Change in fair value of interest rate swap, net of income taxes |  |                                  |      |      |                                 | (1,117 | )    |  |      |       |  |   | (1,117 | )
|                                                                |  |                                  |       |      |                                 |        |      |  |      |        |  |   |        |  
|                                                                |  |                                  |       |     
|Total comprehensive income                                      |  | $                                | 1,980 |      | $                               | 1,135  |      |  | $    | 15,173 |  | $ | 2,356  |  
|                                                                |  |                                  |       |      |                                 |        |      |  |      |        |  |   |        |  



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with our unaudited financial statements and the accompanying notes, which appear elsewhere in
this filing. Statements in this Form 10-Q, which are not historical facts, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The potential risks and uncertainties address a variety of subjects including, for example: the
competitive environment in which Jupitermedia competes; the unpredictability of Jupitermedias future revenues, expenses, cash flows and stock price; Jupitermedias ability to integrate acquired businesses, products and personnel into its
existing businesses; Jupitermedias dependence on a limited number of advertisers; and Jupitermedias ability to protect its intellectual property. For a more detailed discussion of such risks and uncertainties, refer to
Jupitermedias reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. The forward-looking statements included herein are made as of the date of this Form 10-Q, and we are under no obligation
to update the forward-looking statements after the date hereof.

Overview

We are a leading global provider of original images and online information for information technology (IT), business and creative
professionals. Our operations are classified into two principal segments: Online images and Online media.

Online images.Jupiterimages, our Online images business, is one of the leading images companies in the world with over 7.0 million images online serving creative professionals with brands like BananaStock, Workbook Stock, Brand X Pictures, FoodPix,
Botanica, Nonstock, The Beauty Archive, IFA Bilderteam, Comstock Images, Creatas Images, PictureQuest, Liquid Library, Thinkstock Images, Thinkstock Footage, Bigshot Media, Goodshoot, Polka Dot Images, Stock Image, Pixland, Photos.com,
Ablestock.com, PhotoObjects.net, Clipart.com, AnimationFactory.com, JupiterGreetings.com, RoyaltyFreeMusic.com, StudioCutz.com and Stockxpert.com.

We generate our Online images revenues from paid subscriptions that provide access to our image libraries. Customers may purchase subscriptions, which are offered based on a variety of prices and terms, to access our image libraries. Once a
customer becomes a subscriber, they have the ability to obtain copies of images within our image libraries.

We also derive revenue from
granting rights to use images that are downloaded or delivered on CD-ROMs. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and
collectibility is reasonably assured. Delivery occurs upon shipment or the availability of the image for downloading by the customer.

Our
images are licensed online through our networks, through our direct sales force and through third party relationships. We also have agreements with a number of distributors of digital images and footage clips, whereby the distributors make sales to
third party customers and remit a percentage of the sales to us. We recognize the revenue from the sale by the distributor at the time of the sale.

We also license a portion of our images to third parties for royalties based on the licensees revenues generated by the licensed images.

The principal costs of our Online images business relate to commissions paid to third party image suppliers, payroll costs for production personnel, sales and marketing personnel, advertising, technology
infrastructure, lead generation fees for sales referrals and credit card processing fees.

Online media.The
JupiterOnlineMedia division of Jupitermedia consists of five distinct online networks: internet.com and EarthWeb.com for IT and business professionals; DevX.com for developers; and Mediabistro.com and Graphics.com for media and creative
professionals. The networks includes more than 150 Web sites and 150 e-mail newsletters that are viewed by over 20 million users and generate over 400 million page views monthly. JupiterOnlineMedia also includes specialized career Web
sites for select professional communities which can be found on Mediabistro.com and JustTechJobs.com. JupiterOnlineMedia includes the STEP Inside Design and Dynamic Graphics print magazines. These magazines are geared towards graphic design
professionals and provide the reader with ideas and information to help them with both online and offline graphic design and publishing projects. In addition, JupiterOnlineMedia includes JupiterEvents and Mediabistros media-related events
which produce offline conference and trade shows focused on IT and business-specific topics.



14



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##### Table of Contents

We generate our Online media revenues from:



| |  |  | advertising and custom publishing on our Web sites, e-mail newsletters, online discussion forums and moderated e-mail discussion lists;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | e-commerce agreements, which generally include a fixed advertising fee;
| | - |  | -----------------------------------------------------------------------



| |  |  | fees charged for online job postings;
| | - |  | -------------------------------------



| |  |  | advertiser sponsorships for our Webcasts;
| | - |  | -----------------------------------------



| |  |  | advertising, subscriptions and newsstand sales for our print magazines;
| | - |  | -----------------------------------------------------------------------



| |  |  | subscription sales for our paid e-mail newsletters and services;
| | - |  | ----------------------------------------------------------------



| |  |  | attendee registration fees for our online and in-person training courses;
| | - |  | -------------------------------------------------------------------------



| |  |  | attendee registration fees to our conferences and trade shows;
| | - |  | --------------------------------------------------------------



| |  |  | exhibition space fees and vendor sponsorships to our conferences and trade shows;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | renting our permission based opt-in e-mail list names; and
| | - |  | ----------------------------------------------------------



| |  |  | licensing our editorial content, software and brands to third parties for fixed fees and royalties based on the licensees revenues generated by the licensed
property.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

The principal costs of our Online media business relate to payroll for our editorial, technology, operations
and sales personnel; technology related costs for facilities and equipment; paper and printing costs; and venue, speaker and advertising expenses for training and events.

Recent Acquisition

On July 18, 2007, Jupitermedia acquired all of the shares of Mediabistro.com
Inc (Mediabistro). The consideration paid was $20 million in cash and a two year earn-out that could result in an additional $3 million in cash consideration. The acquisition of Mediabistro solidifies our position in the important media
professionals market. The acquisition further diversifies our revenue sources since a significant percentage of Mediabistros revenue is generated from online job postings and online and in-person training courses.

Results of Operations

Revenues

The following tables sets forth, for the periods indicated, a comparison of our revenues by segment (dollars in thousands):



|              |  |                                 |        |               |   |        |                                |   |               |  |      |   |      |   |         |  |   |         |  |   |        |   |  |      |  
|------------- |  | ------------------------------- | ------ | ------------- | - | ------ | ------------------------------ | - | ------------- |  | ---- | - | ---- | - | ------- |  | - | ------- |  | - | ------ | - |  | ---- | -
|              |  | Three Months EndedSeptember 30, |        | 2006 vs. 2007 |   |        | Nine Months EndedSeptember 30, |   | 2006 vs. 2007 | 
|              |  | 2006                            |        | 2007          |   | $      |                                | % |               |  | 2006 |   | 2007 |   | $       |  |   | %       | 
|Online images |  | $                               | 26,177 |               | $ | 26,824 |                                | $ | 647           |  | 2    | % |      | $ | 79,549  |  | $ | 82,121  |  | $ | 2,572  |   |  | 3    | %
|Online media  |  |                                 | 7,607  |               |   | 7,942  |                                |   | 335           |  | 4    |   |      |   | 23,196  |  |   | 22,085  |  |   | (1,111 | ) |  | (5   | )
|Other         |  |                                 |       |               |   |       |                                |   |              |  |     |   |      |   | 6       |  |   |        |  |   | (6     | ) |  | (100 | )
|              |  |                                 |        |               |   |        |                                |   |               |  |      |   |      |   |         |  |   |         |  |   |        |   |  |      |  
|              |  | $                               | 33,784 |               | $ | 34,766 |                                | $ | 982           |  | 3    | % |      | $ | 102,751 |  | $ | 104,206 |  | $ | 1,455  |   |  | 1    | %
|              |  |                                 |        |               |   |        |                                |   |               |  |      |   |      |   |         |  |   |         |  |   |        |   |  |      |  

Online images. The increase in revenues during the three and nine months ended
September 30, 2007 is due primarily to acquisitions consummated after September 30, 2006.

The following table sets forth, for
the three and nine months ended September 30, 2006 and 2007, the components of our Online images revenues (dollars in thousands):



|                                  |  |                                  |        |                                 |   |        |  |      |        |  |   |       
|--------------------------------- |  | -------------------------------- | ------ | ------------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                  |  | Three Months Ended September 30, |        | Nine Months Ended September 30,
|                                  |  | 2006                             |        | 2007                            |   | 2006   |  | 2007
|Single images and CD-ROMs         |  | $                                | 13,566 |                                 | $ | 13,197 |  | $    | 39,694 |  | $ | 39,831
|Subscriptions                     |  |                                  | 6,376  |                                 |   | 7,146  |  |      | 18,852 |  |   | 21,467
|Distributors, licensing and other |  |                                  | 6,235  |                                 |   | 6,481  |  |      | 21,003 |  |   | 20,823
|                                  |  |                                  |        |                                 |   |        |  |      |        |  |   |       
|Total Online images               |  | $                                | 26,177 |                                 | $ | 26,824 |  | $    | 79,549 |  | $ | 82,121
|                                  |  |                                  |        |                                 |   |        |  |      |        |  |   |       



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##### Table of Contents

Online media. The increase in revenues during the three months ended September 30, 2007 was
due to the acquisition of Mediabistro which added $1.6 million in revenues. This was offset by a reduction in advertising revenues and in the number of advertisers. The decrease in revenues during the nine months ended September 30, 2007 was
due primarily to a reduction in advertising revenues due to a reduction in advertising spending by technology companies.

The following
table sets forth a quarter-by-quarter comparison of the number of our Online media online advertisers and the average revenue derived from each advertiser (dollars in thousands):



|                   |  |                       |  |                                |   
|------------------ |  | --------------------- |  | ------------------------------ | --
|                   |  | Number of Advertisers |  | Average Revenue per Advertiser
|March 31, 2006     |  | 238                   |  | $                              | 28
|June 30, 2006      |  | 219                   |  |                                | 35
|September 30, 2006 |  | 214                   |  |                                | 33
|December 31, 2006  |  | 214                   |  |                                | 34
|March 31, 2007     |  | 223                   |  |                                | 27
|June 30, 2007      |  | 239                   |  |                                | 25
|September 30, 2007 |  | 211                   |  |                                | 27

Other.Other revenues during the nine months ended September 30, 2006 represent
management fees from our management of internet.com Venture Fund I LLC (VFI). Due to the dissolution of VFI in December 2006, these revenues will no longer be recognized.

Cost of revenues

The following table
sets forth, for the periods indicated, a comparison of our cost of revenues by segment (dollars in thousands):



|              |  |                                 |        |               |   |        |                                |   |               |  |      |   |      |   |        |  |   |        |  |   |       |  |    |  
|------------- |  | ------------------------------- | ------ | ------------- | - | ------ | ------------------------------ | - | ------------- |  | ---- | - | ---- | - | ------ |  | - | ------ |  | - | ----- |  | -- | -
|              |  | Three Months EndedSeptember 30, |        | 2006 vs. 2007 |   |        | Nine Months EndedSeptember 30, |   | 2006 vs. 2007 | 
|              |  | 2006                            |        | 2007          |   | $      |                                | % |               |  | 2006 |   | 2007 |   | $      |  | % |       
|Online images |  | $                               | 9,216  |               | $ | 10,682 |                                | $ | 1,466         |  | 16   | % |      | $ | 27,438 |  | $ | 33,558 |  | $ | 6,120 |  | 22 | %
|Online media  |  |                                 | 2,899  |               |   | 3,842  |                                |   | 943           |  | 33   |   |      |   | 9,314  |  |   | 10,267 |  |   | 953   |  | 10 |  
|              |  |                                 |        |               |   |        |                                |   |               |  |      |   |      |   |        |  |   |        |  |   |       |  |    |  
|              |  | $                               | 12,115 |               | $ | 14,524 |                                | $ | 2,409         |  | 20   | % |      | $ | 36,752 |  | $ | 43,825 |  | $ | 7,073 |  | 19 | %
|              |  |                                 |        |               |   |        |                                |   |               |  |      |   |      |   |        |  |   |        |  |   |       |  |    |  

Online images. Cost of revenues primarily consists of commissions paid to third party image
suppliers, payroll and benefits costs for technology and production personnel, communications infrastructure, Web site hosting and storage for our image library. Cost of revenues excludes depreciation and amortization. The increase in cost of
revenues during the three and nine months ended September 30, 2007, is primarily due to an increase in commission expense of $1.1 million and $3.3 million, respectively, and an increase in employee related costs of $630,000 and $3.1 million,
respectively. These increases in commission expense were primarily a result of the acquisitions consummated during 2006. The increase in employer related costs is due primarily to increases in technology and production personnel.

We intend to make investments through internal development and, where appropriate opportunities arise, acquisitions to continue to expand our image
library and to substitute licensed images with images that we own that will result in reduced commission expense in the future. As we continue to make investments to increase the size of our image library, we may need to increase our spending for
Web site hosting and storage costs.

Online media. Cost of revenues primarily consists of payroll and benefits costs for technology
and editorial personnel, freelance costs, communications infrastructure and Web site hosting. Cost of revenues excludes depreciation and amortization. The increase in cost of revenues for the three and nine months ended September 30, 2007 was
due primarily to the acquisition of Mediabistro on July 18, 2007, which added $526,000 to cost of revenues. The remaining increase for the three and nine months ended September 30, 2007 was due to costs associated with events of $296,000
and $753,000, respectively.

We intend to make investments through internal development and, where appropriate opportunities arise,
acquisitions to continue to expand our content offerings. We may need to increase our spending in order to create additional content related to new topics or offerings.



16



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##### Table of Contents

Advertising, promotion and selling

The following table sets forth, for the periods indicated, a comparison of our advertising, promotion and selling expenses by segment (dollars in
thousands):



|              |  |                                 |       |               |   |       |                                |   |               |   |  |      |    |      |   |        |  |   |        |  |   |      |   |  |    |   
|------------- |  | ------------------------------- | ----- | ------------- | - | ----- | ------------------------------ | - | ------------- | - |  | ---- | -- | ---- | - | ------ |  | - | ------ |  | - | ---- | - |  | -- | --
|              |  | Three Months EndedSeptember 30, |       | 2006 vs. 2007 |   |       | Nine Months EndedSeptember 30, |   | 2006 vs. 2007 |  
|              |  | 2006                            |       | 2007          |   | $     |                                |   | %             |   |  | 2006 |    | 2007 |   | $      |  |   | %      | 
|Online images |  | $                               | 5,505 |               | $ | 5,203 |                                | $ | (302          | ) |  | (5   | )% |      | $ | 16,720 |  | $ | 15,961 |  | $ | (759 | ) |  | (5 | )%
|Online media  |  |                                 | 1,615 |               |   | 1,965 |                                |   | 350           |   |  | 22   |    |      |   | 5,441  |  |   | 5,573  |  |   | 132  |   |  | 2  |   
|              |  |                                 |       |               |   |       |                                |   |               |   |  |      |    |      |   |        |  |   |        |  |   |      |   |  |    |   
|              |  | $                               | 7,120 |               | $ | 7,168 |                                | $ | 48            |   |  | 1    | %  |      | $ | 22,161 |  | $ | 21,534 |  | $ | (627 | ) |  | (3 | )%
|              |  |                                 |       |               |   |       |                                |   |               |   |  |      |    |      |   |        |  |   |        |  |   |      |   |  |    |   

Online images. Advertising, promotion and selling expenses primarily consists of payroll
and benefits costs for sales and marketing personnel and advertising. The decrease in advertising, promotion and selling expense during the three months ended September 30, 2007 is primarily due to a decrease in print advertising expense of
$212,000 and a decrease in employee related costs of $41,000. The decrease for the nine months ended September 30, 2007 is primarily due to a decrease in print advertising expense of $1.5 million partially offset by an increase in employee
related costs of $778,000.

Online media. Advertising, promotion and selling expenses primarily consists of payroll and benefits
costs for sales and marketing personnel. The increase in advertising, promotion and selling expenses from 2006 to 2007 for the three and nine months ended September 30, 2007 is due primarily to the acquisition of Mediabistro, which added
$172,000 to advertising, promotion and selling expense. The remaining increase during the three months ended September 30, 2007 relates to an increase in employee and marketing costs related to events of $160,000.

General and administrative

The
following table sets forth, for the periods indicated, a comparison of our general and administrative expenses by segment (dollars in thousands):



|              |  |                                 |       |               |   |       |                                |   |               |   |  |      |    |      |   |        |  |   |        |  |   |      |   |  |     |   
|------------- |  | ------------------------------- | ----- | ------------- | - | ----- | ------------------------------ | - | ------------- | - |  | ---- | -- | ---- | - | ------ |  | - | ------ |  | - | ---- | - |  | --- | --
|              |  | Three Months EndedSeptember 30, |       | 2006 vs. 2007 |   |       | Nine Months EndedSeptember 30, |   | 2006 vs. 2007 |  
|              |  | 2006                            |       | 2007          |   | $     |                                |   | %             |   |  | 2006 |    | 2007 |   | $      |  |   | %      | 
|Online images |  | $                               | 2,254 |               | $ | 2,107 |                                | $ | (147          | ) |  | (7   | )% |      | $ | 6,786  |  | $ | 5,926  |  | $ | (860 | ) |  | (13 | )%
|Online media  |  |                                 | 102   |               |   | 583   |                                |   | 481           |   |  | 472  |    |      |   | 497    |  |   | 955    |  |   | 458  |   |  | 92  |   
|Other         |  |                                 | 4,903 |               |   | 3,821 |                                |   | (1,082        | ) |  | (22  | )  |      |   | 13,343 |  |   | 14,340 |  |   | 997  |   |  | 7   |   
|              |  |                                 |       |               |   |       |                                |   |               |   |  |      |    |      |   |        |  |   |        |  |   |      |   |  |     |   
|              |  | $                               | 7,259 |               | $ | 6,511 |                                | $ | (748          | ) |  | (10  | )% |      | $ | 20,626 |  | $ | 21,221 |  | $ | 595  |   |  | 3   | % 
|              |  |                                 |       |               |   |       |                                |   |               |   |  |      |    |      |   |        |  |   |        |  |   |      |   |  |     |   

Online images. General and administrative expenses primarily consists of payroll and
benefits costs for administrative personnel, office related costs, professional fees and provisions for losses on accounts receivable. The decrease in general and administrative expenses from the three months ended September 30, 2006 to the
three months ended September 30, 2007 is due primarily to a reduction in office related expense of $106,000. The decrease in general and administrative expenses during the nine months ended September 30, 2007 is due to a decrease in
professional fees of $372,000, and a reduction in bad debt expense of $365,000.

Online media. General and administrative expenses
primarily consist of office related costs and provisions for losses on accounts receivable. The increase in general and administrative expenses from the three and nine months ended September 30, 2006 to the three and nine months ended
September 30, 2007 was due primarily to the acquisition of Mediabistro, which added $272,000 to general and administrative costs. The remaining increase during the three and nine months ended September 30, 2007 was due to an increase in
office related costs of $128,000 and $260,000, respectively.

Other. General and administrative expenses primarily consist of
payroll and benefits costs for administrative personnel, office related costs and professional fees. The decrease in general and administrative expense from the three months ended September 30, 2006 to the three months ended September 30,
2007 is primarily due to a decrease in professional fees of $596,000 and a decrease in employee related costs of $553,000. The increase in general and administrative expense from the nine months ended September 30, 2006 to the nine months ended
September 30, 2007 is primarily due to an increase in legal and accounting fees of $1.9 million associated with discussions with Getty Images, Inc. regarding a potential transaction which were terminated on March 7, 2007. This was
partially offset by a reduction in professional consulting fees of $1.2 million.



17



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##### Table of Contents

Depreciation and amortization

The following table sets forth, for the periods indicated, a comparison of our depreciation and amortization expenses (dollars in thousands):



|             |  |                                 |       |               |   |       |                                |   |               |  |      |   |      |   |       |  |   |        |  |   |       |  |    |  
|------------ |  | ------------------------------- | ----- | ------------- | - | ----- | ------------------------------ | - | ------------- |  | ---- | - | ---- | - | ----- |  | - | ------ |  | - | ----- |  | -- | -
|             |  | Three Months EndedSeptember 30, |       | 2006 vs. 2007 |   |       | Nine Months EndedSeptember 30, |   | 2006 vs. 2007 | 
|             |  | 2006                            |       | 2007          |   | $     |                                | % |               |  | 2006 |   | 2007 |   | $     |  | % |       
|Depreciation |  | $                               | 996   |               | $ | 1,128 |                                | $ | 132           |  | 13   | % |      | $ | 2,498 |  | $ | 3,353  |  | $ | 855   |  | 34 | %
|Amortization |  |                                 | 2,637 |               |   | 3,381 |                                |   | 744           |  | 28   |   |      |   | 7,003 |  |   | 9,669  |  |   | 2,666 |  | 38 |  
|             |  |                                 |       |               |   |       |                                |   |               |  |      |   |      |   |       |  |   |        |  |   |       |  |    |  
|             |  | $                               | 3,633 |               | $ | 4,509 |                                | $ | 876           |  | 24   | % |      | $ | 9,501 |  | $ | 13,022 |  | $ | 3,521 |  | 37 | %
|             |  |                                 |       |               |   |       |                                |   |               |  |      |   |      |   |       |  |   |        |  |   |       |  |    |  

Depreciation and amortization expense increased during the three and nine months ended
September 30, 2007 due primarily to acquisitions consummated after September 30, 2006 along with changes made to the preliminary purchase price of certain acquisitions resulting from final third party valuation adjustments of certain
intangible assets.

Our depreciation and amortization expenses may vary in future periods based upon a change in our capital expenditure
levels, any purchase accounting adjustments relating to our acquisitions or any future acquisitions.

Interest income and interest
expense

The following table sets forth, for the periods indicated, a comparison of our interest income and interest expense (dollars in
thousands):



|                 |  |                                 |        |   |               |   |        |                                |  |   |               |   |  |      |    |  |      |        |   |   |   |        |   |  |   |        |   |  |     |   
|---------------- |  | ------------------------------- | ------ | - | ------------- | - | ------ | ------------------------------ |  | - | ------------- | - |  | ---- | -- |  | ---- | ------ | - | - | - | ------ | - |  | - | ------ | - |  | --- | --
|                 |  | Three Months EndedSeptember 30, |        |   | 2006 vs. 2007 |   |        | Nine Months EndedSeptember 30, |  |   | 2006 vs. 2007 |  
|                 |  | 2006                            |        |   | 2007          |   |        | $                              |  |   | %             |   |  | 2006 |    |  | 2007 |        |   | $ |   |        | % | 
|Interest income  |  | $                               | 99     |   |               | $ | 62     |                                |  | $ | (37           | ) |  | (37  | )% |  | $    | 380    |   |   | $ | 140    |   |  | $ | (240   | ) |  | (63 | )%
|Interest expense |  |                                 | (1,395 | ) |               |   | (2,328 | )                              |  |   | (933          | ) |  | (67  | )  |  |      | (4,107 | ) |   |   | (5,232 | ) |  |   | (1,125 | ) |  | (27 | ) 

Interest expense relates primarily to borrowings under our senior credit facilities and debt
issuance costs that were expensed during the three and nine months ended September 30, 2007 related to the previous credit facility that was repaid with proceeds from the new credit facility arranged by KeyBank National Association in July 2007 (see
Liquidity and Capital Resources).

Provision for income taxes

A provision for income taxes of $307,000 and $325,000 was recorded for the three and nine months ended September 30, 2007, respectively. The income
tax provision for the three and nine months ended September 30, 2007 was primarily due to income in certain foreign jurisdictions and to adjustments to deferred tax assets resulting from a decrease in certain state tax rates.

Minority interests

Minority
interests represent the minority stockholders proportionate share of profits or losses of our majority-owned Japanese and Hungarian subsidiaries. Japan.internet.com KK and Jupiterimages Japan represent our Online media and Online images
businesses, respectively, focused on Japan. HAAP Media Ltd. is our microstock Online images business based in Hungary.



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##### Table of Contents

Liquidity and Capital Resources

The following table sets forth, for the periods indicated, a comparison of the key components of our liquidity and capital resources (dollars in
thousands):



|                           |  |                                |         |   |                    |   |         |   |  |   |         |   |  |     |   
|-------------------------- |  | ------------------------------ | ------- | - | ------------------ | - | ------- | - |  | - | ------- | - |  | --- | --
|                           |  | Nine Months EndedSeptember 30, |         |   | 2006 vs. 2007      |  
|                           |  | 2006                           |         |   | 2007               |   |         | $ |  |   | %       |  
|Operating cash flows       |  | $                              | 5,448   |   |                    | $ | 10,154  |   |  | $ | 4,706   |   |  | 86  | % 
|Investing cash flows       |  | $                              | (21,496 | ) |                    | $ | (34,107 | ) |  | $ | (12,611 | ) |  | 59  | % 
|Financing cash flows       |  | $                              | 7,658   |   |                    | $ | 22,223  |   |  | $ | 14,565  |   |  | 190 | % 
|Acquisitions of businesses |  | $                              | (29,162 | ) |                    | $ | (30,246 | ) |  | $ | (1,084  | ) |  | 4   | % 
|Capital expenditures       |  | $                              | (2,302  | ) |                    | $ | (4,003  | ) |  | $ | (1,701  | ) |  | 74  | % 
|                           |  |                               
|                           |  | As of                          |         |   | 2006 vs. 2007      |  
|                           |  | December 31, 2006              |         |   | September 30, 2007 |   |         | $ |  |   | %       |  
|Cash and cash equivalents  |  | $                              | 8,891   |   |                    | $ | 7,433   |   |  | $ | (1,458  | ) |  | (16 | )%
|Accounts receivable, net   |  | $                              | 25,296  |   |                    | $ | 27,176  |   |  | $ | 1,880   |   |  | 7   | % 
|Working capital/(deficit)  |  | $                              | (12,150 | ) |                    | $ | 5,657   |   |  | $ | 17,807  |   |  | 147 | % 
|Long-term debt             |  | $                              | 49,899  |   |                    | $ | 87,063  |   |  | $ | 37,164  |   |  | 74  | % 

Since inception, we have funded operations through various means including our initial and
follow-on public offerings of our common stock in June 1999, February 2000 and May 2004, the sale of our Events and Research businesses, through various credit agreements and through cash flows from operating activities.

Cash provided by operating activities increased during the nine months ended September 30, 2007 primarily due to increases in depreciation and
amortization expense.

The amounts of cash used in investing activities vary in correlation to the number and cost of the acquisitions
consummated. Net cash used in investing activities in 2007 related primarily to acquisitions of certain businesses, including the acquisition of Mediabistro, and an increase in information technology related spending. Net cash used in investing
activities in 2006 related primarily to acquisitions of certain businesses.

Cash provided by financing activities during the nine months
ended September 30, 2006 and 2007 relates primarily to borrowings under our senior credit facilities.

We are party to a Credit and
Security Agreement, dated as of July 12, 2007 (the Credit Agreement), among ourselves, as borrower, the lenders party thereto (the Lenders), KeyBank National Association, as the lead arranger, sole book runner and
administrative agent (the Administrative Agent), and Citizens Bank, N.A., as Syndication Agent. The Credit Agreement provides for $115 million senior credit facility. The senior credit facility is comprised of (i) a $75 million term
loan facility, that was drawn in full on July 12, 2007, and (ii) a $40 million revolving credit facility, including a $2 million sublimit for letters of credit and a $5 million swingline facility. The future minimum payments under the
Credit Agreement are $187,500 for the year ended December 31, 2007, $750,000 for the years ended December 31, 2008 through 2011 and $84.6 million thereafter. Jupitermedias outstanding debt, relating to the Credit Agreement, as of
September 30, 2007 is reflected in the unaudited consolidated condensed balance sheet. Jupitermedia made one quarterly debt payment on its term loan totaling $187,500 during the three months ended September 30, 2007.

We expect to continue our investing activities, which includes the potential to strategically acquire companies, content and images that are
complementary to our business. Although we are currently considering potential strategic acquisitions, we have no binding commitments or agreements with respect to any such acquisitions. We expect to finance future acquisitions through a combination
of long-term and short-term financing including debt, equity and cash and internally generated cash flow. We may obtain additional long-term financing through the issuance of equity securities and the incurrence of additional long-term secured or
unsecured debt.

Our existing cash and investment balances may decline during 2007 in the event of a downturn in the general economy or
changes in our planned cash outlay. However, based on our current business plan and revenue prospects, we believe that our existing balances together with our anticipated cash flows from operations will be sufficient to meet our working capital and
operating resource expenditure requirements for the next twelve months.



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##### Table of Contents

Off-Balance Sheet Arrangements and Contractual Obligations

We have not entered into off-balance sheet arrangements or issued guarantees to third parties.

The following table represents our expected cash requirements for contractual obligations outstanding as of September 30, 2007 (in thousands):



|                                  |  |       |        |                  |   |           |  |           |       |                   |   |       |  |   |       
|--------------------------------- |  | ----- | ------ | ---------------- | - | --------- |  | --------- | ----- | ----------------- | - | ----- |  | - | ------
|                                  |  | Total |        | Less than 1 year |   | 1-3 years |  | 3-5 years |       | More than 5 years
|Long-term debt                    |  | $     | 87,813 |                  | $ | 750       |  | $         | 1,500 |                   | $ | 1,500 |  | $ | 84,063
|Operating lease obligations       |  |       | 9,214  |                  |   | 3,135     |  |           | 5,173 |                   |   | 906   |  |   |      
|Purchase obligation - acquisition |  |       | 281    |                  |   | 281       |  |           |      |                   |   |      |  |   |      
|                                  |  |       |        |                  |   |           |  |           |       |                   |   |       |  |   |       
|                                  |  | $     | 97,308 |                  | $ | 4,166     |  | $         | 6,673 |                   | $ | 2,406 |  | $ | 84,063
|                                  |  |       |        |                  |   |           |  |           |       |                   |   |       |  |   |       

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America, and expands
disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are currently evaluating whether the
adoption of SFAS No. 157 will have an impact on our consolidated financial position, results of operations or cash flows.

In February
2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains
and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating whether the adoption of SFAS
No. 159 will have an impact on our consolidated financial position, results of operations or cash flows.

Critical Accounting Policies

There have been no changes to our critical accounting policies from those included in our most recent Form 10-K for the year ended
December 31, 2006.



|Item 3. | Quantitative and Qualitative Disclosure about Market Risks
|------- | ----------------------------------------------------------

We have no derivative commodity instruments. We invest our excess cash in debt instruments of the U.S. Government and its agencies.

We invest in equity instruments of privately held, online media and technology companies for business and strategic purposes. These investments are included in investments and other assets and are accounted for under the cost method, as we
do not have the ability to exert significant influence over the companies or their operations. For these non-quoted investments, our policy is to regularly review the assumptions underlying the operating performance and cash flow forecasts in
assessing the carrying values. We identify and record impairment losses on long-lived assets when events and circumstances indicate that such assets might be impaired.

We were the portfolio manager of, and an investor in, internet.com Venture Fund I LLC, or Fund I, a $5 million venture fund formed in March 1999. Fund I invested in early-stage content-based Internet properties that
are not competitive with our business. Fund I was dissolved in 2006 as it had reached the end of its seven year life. The final distribution was made following the dissolution. We are also subject to interest rate fluctuations related to our
borrowings under the Credit Agreement with KeyBank National Association.

We are exposed to interest rate risks primarily through the
borrowings associated with our $115 million credit facility. Interest on our borrowings is based on upon variable rates (indexed based on LIBOR) and we have entered into an interest rate swap with a notional amount of $50 million which, for a
portion of our variable rate debt, effectively converts the variable component of our interest into a fixed rate of 5.58%. The interest rate swap is designated as a cash flow hedge, the effective portion of which is recorded as an unrecognized gain
(loss) in accumulated other comprehensive income in stockholders equity. The fair value of the interest rate swap as of September 30, 2007, was approximately $1.9 million and is included in our other long-term liabilities of our unaudited
consolidated condensed balance sheet.



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##### Table of Contents

|Item 4. | Controls and Procedures
|------- | -----------------------

Our management, including
the Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of September 30, 2007. Based on such evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There have been no changes in our internal control over financial reporting during the period covered by this
report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART IIOTHER INFORMATION



|Item 1. | LEGAL PROCEEDINGS
|------- | -----------------

On or about
November 13, 2006, Robert Lange, who identifies himself as a stockholder of Jupitermedia, commenced a purported stockholders derivative action in the United States District Court for the District of Connecticut, purportedly on behalf of
Jupitermedia, against all of Jupitermedias current directors and against Jupitermedias former Chief Financial Officer. Jupitermedia is named in the suit as a nominal defendant on whose behalf recovery is purportedly sought.
Mr. Lange did not make a litigation demand on Jupitermedias board of directors prior to commencing the action, and alleges that such demand should be excused as a matter of law. The complaint alleges, based primarily on a statistical
analysis, that certain stock options granted to certain defendants in 1999, 2000 and 2001 were backdated, and asserts on behalf of Jupitermedia various causes of action against the defendants arising out of such alleged backdating, including
securities fraud, breach of fiduciary duty and unjust enrichment. On April 24, 2007, we and the individual defendants filed a motion to dismiss the case in its entirety. Rather than respond to the motion to dismiss, the Plaintiff filed an
amended complaint on July 16, 2007. The amended complaint removes one of the individual defendants, but is substantially similar to the original complaint. On or around September 11, 2007, Defendants filed a motion to dismiss the Amended
Complaint. Briefing on that motion is completed, and oral argument is scheduled to be held on the motion in December 2007.



|Item 1A. | RISK FACTORS
|-------- | ------------

Not Applicable



|Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

Not Applicable



|Item 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

Not Applicable



|It
em 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|-------- | ---------------------------------------------------

Not
Applicable



|Item 5. | OTHER INFORMATION
|------- | -----------------

Not Applicable



|Item 6. | EXHIBITS
|------- | --------

The following is a list of
exhibits filed as part of this Report on Form 10-Q. Where so indicated by footnote, exhibits, which were previously filed, are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is
indicated parenthetically except for in those situations where the exhibit number was the same as set forth below.



|               |  |                                                                           
|-------------- |  | --------------------------------------------------------------------------
|Exhibit Number |  | Description                                                               
|3.1*           |  | Registrants Amended and Restated Certificate of Incorporation, as amended
|               | 
|3.2**          |  | Registrants Bylaws                                                       



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##### Table of Contents

|               |  |                                                                                                                                                                                                                                                                                                                                                                     
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                         
|10.1***        |  | Credit Agreement, dated July 12, 2007, among Jupitermedia Corporation, as borrower, the lenders party thereto, KeyBank National Association, as the lead arranger, sole book runner and
administrative agent, and Citizens Bank, N.A., as Syndication Agent.                                                                                                        
|               | 
|10.2***        |  | Guaranty of Payment Agreement, dated July 12, 2007, among Jupiterimages Corporation as guarantor in favor of KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                 
|               | 
|10.3***        |  | Guaranty of Payment Agreement, dated July 12, 2007, among I-Venture Management LLC as guarantor in favor of KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                  
|               | 
|10.4***        |  | Guaranty of Payment Agreement, dated July 12, 2007, among Workbook, Inc. as guarantor in favor of KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                            
|               | 
|10.5***        |  | Security Agreement, dated July 12, 2007, among Jupiterimages Corporation as pledgor and KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                                      
|               | 
|10.6***        |  | Security Agreement, dated July 12, 2007, among I-Venture Management LLC as pledgor and KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                                       
|               | 
|10.7***        |  | Security Agreement, dated July 12, 2007, among Workbook, Inc. as pledgor and KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                                                 
|               | 
|10.8***        |  | Intellectual Property Security Agreement, dated July 12, 2007, among Jupiterimages Corporation as pledgor and KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                
|               | 
|10.9***        |  | Intellectual Property Security Agreement, dated July 12, 2007, among Jupitermedia Corporation as borrower and KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                
|               | 
|10.10***       |  | Pledge Agreement, dated July 12, 2007, among Jupitermedia Corporation, as borrower and KeyBank National Association, as Administrative Agent                                                                                                                                                                                                                        
|               | 
|10.11***       |  | Pledge Agreement, dated July 12, 2007, among Jupiterimages Corporation, as pledgor and KeyBank National Association, as Administrative Agent.                                                                                                                                                                                                                       
|               | 
|10.12****      |  | Agreement and Plan of Merger, dated as of July 17, 2007, by and among Jupitermedia Corporation, a Delaware corporation, Mediabistro Acquisition Subsidiary, Inc., a Delaware corporation and a
wholly-owned subsidiary of Jupitermedia Corporation, Mediabistro.com Inc., a Delaware corporation and Laurel Touby, as agent for the security holders of the Company.
|               | 
|11*****        |  | Statement Regarding Computation of Per Share Earnings (Loss) (included in notes to consolidated condensed financial statements)                                                                                                                                                                                                                                     
|               | 
|31.1           |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                             
|               | 
|31.2           |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                             
|               | 
|32.1           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                              
|               | 
|32.2           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                              

---

|* | Incorporated herein by reference to the Registrants Form 10-K filed on March 5, 2004.
|- | --------------------------------------------------------------------------------------

|** | Incorporated herein by reference to the Registrants Registration Statement on Form S-1 (File No. 333-76331) filed on April 15, 1999.
|-- | -------------------------------------------------------------------------------------------------------------------------------------

|*** | Incorporated herein by reference to the Registrants Form 8-K Filed on July 18, 2007.
|--- | -------------------------------------------------------------------------------------

|**** | Incorporated herein by reference to the registrants Form 8-K Filed on July 20, 2007.
|---- | -------------------------------------------------------------------------------------

|***** | Included in notes to consolidated condensed financial statements.
|----- | -----------------------------------------------------------------



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        |  |                                                
|----------------------- |  | -----------------------------------------------
|Dated: November 9, 2007 |  | Jupitermedia Corporation                       
|                        | 
|                        |  | /s/ Christopher S. Cardell                     
|                        |  | Christopher S. Cardell                         
|                        |  | Director, President and Chief Operating Officer
|                        | 
|                        |  | /s/ Donald J. ONeill                          
|                        |  | Donald J. ONeill                              
|                        |  | Vice President and Chief Financial Officer     



23